Retailers wait to raise prices at pump

Thursday

Aug 1, 2013 at 6:00 AMAug 1, 2013 at 2:05 PM

The 3-cents per gallon gas tax hike went into effect Wednesday, but many retailers say they're holding off to see what their competitors do. "We didn't move prices. Gas prices are very competitive. We chose to absorb the increase because it's such a tough hike on consumers," said Sean Flynn, owner of Flynn's Truck Stop in Shrewsbury.

By Elaine Thompson TELEGRAM & GAZETTE STAFF

The 3-cents per gallon gas tax hike went into effect Wednesday, but many retailers say they're holding off to see what their competitors do.

Sean Flynn, owner of Flynn's Truck Stop in Shrewsbury, said the price for regular unleaded self-service gas at his station remained at $3.62 a gallon.

"We didn't move prices. Gas prices are very competitive. We chose to absorb the increase because it's such a tough hike on consumers," Mr. Flynn said.

He said he's not certain when he will implement the new tax.

"It depends on the wholesale market, which fluctuates half a penny to a few cents pretty much every day," he said.

The 3-cent increase moves the state tax on a gallon of gas to 24 cents. That's in addition to the 18.4 cents per gallon federal tax.

Howard Peterson, owner of five gas stations in Worcester, Northboro, Leicester and Northbridge, said he, too, absorbed the higher tax Wednesday, but taxation is only one aspect he looks at when deciding the daily price. He said he also considers the cost from suppliers, the cost of operating a station, and the competitive nature of the business.

"We have a very competitive local economy so we will monitor how our competition treats this," he said. "I am not completely sure how all this will work out, but I anticipate over time, the tax increase will be reflected in some higher cost."

Mr. Peterson said that most likely, the new gas tax is going to be offset by a decrease in prices at the pump as summer winds down. He said as of yesterday, the benchmark price of a gallon of regular gas on the Mercantile Exchange was $3.04. That price is expected to be $2.78 by November.

"I anticipate in the short term a consumer may not see the full cost of the tax passed along because gas prices are scheduled to fall. If prices were expected to continue rising, you'd see an immediate impact," he said.

A spokesperson for Woodbridge, N.J.-based Hess, which operates 120 gas stations in Massachusetts, said prices did not go up to reflect the new gas tax. He said he is not exactly sure if and when that would happen.

John T. Howell, executive director of the Billerica-based New England Service Station and Automobile Repair Association, said he does not know of any station that increased prices to reflect the new tax.

"From my observation while on the road this morning, I have not seen prices go up," he said. "We didn't raise ours. We absorb a lot of the increases. We base our price on our competition. If they haven't raised it, we don't."

Mr. Howell said because of the volatile retail gas industry, he is selling his gas station in two weeks, after 20 years in business. "The reason I'm selling is because I've lost a lot of money over the last two years.

"When the credit card company makes more money per gallon of gas than the retailer, its not really a fair business," said Mr. Howell.

"Big corporate America has taken over the drug stores, the hardware stores. Now it's taking over the gasoline business."

Mr. Flynn said he supports the gas tax increase as long as it is used to improve roads

But, he doesn't like the fact that the tax will automatically increase each January if the consumer price index goes up.

"Any tax increase without a vote, I'm definitely very leery of that," he said.

Kirsten Hughes, chairman of the state Republican Party, is scheduled to speak at a protest against the tax hike set for 11:30 a.m. Thursday at the Shell gas station at 4 Oak St. in Gardner.